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July 29, 2013

In the lead-up to the Emmy nominations, I began to see a lot of articles suggesting that Netflix is the new HBO. While this comparison has some truth to it, I believe that Netflix is much more than just the next HBO.

I had the opportunity to be at the first cable show where HBO showed its product at many years ago. In those days, the big networks were ABC, CBS and NBC, and while cable was gaining as a TV delivery medium, most of the channels available were also available over the air (OTA).

However, some channels were beginning to be created just for cable, and HBO was proposing something very interesting at this time: premium programming. This meant that along with paying for the cable feed, a user would need to subscribe to get special HBO services, which in those days were just movies.

HBO popularized the premium channel concept and literally laid the groundwork for other premium programming. Now there are dozens of premium channels to subscribe to for the many U.S. households that are cable subscribers today. In fact, in these passing years, cable has become the most powerful medium for video and TV content distribution, and cable companies have become big players in Hollywood.

At this cable show, I got to meet with HBO executives, who shared their vision of being the go-to service for watching movies. While HBO's early offerings were minimal, it had already set its sights on acquiring movie content from all over the world and establishing itself as the primary premium channel in the U.S.

I distinctly remember HBO executives telling me that what they had was groundbreaking and could change the way people view TV content in the future. However, I am pretty sure that even in their dreams, they didn't envision a day when they would actually create original programming and become an actual television production company as well.

As the Emmy nominations approached last week, there was buzz in Hollywood and Silicon Valley that Netflix's two shows that it had recently produced, Arrested Development and House of Cards, could become the first shows designed specifically for on-demand and over-the-air content distribution to receive Emmy nominations. Up to now, this has been the purview of dedicated production companies who create content just for the networks - or the cable networks themselves. An upstart like Netflix, with its OTA approach to content delivery, was not supposed to have the skills to do anything other than just be a medium for OTA content delivery.

You have to give Netflix CEO Reed Hastings a lot of credit for the kind of visionary thinking that drove him to create original programming. It's ironic that less than two years ago he was considered evil because he split the subscription prices for mailed DVDs and online content into two separate services. Industry execs and users alike complained to high heaven that this move was unfair to subscribers. But clearly Reed knew what a lot of us insiders knew: the days of DVDs being mailed for viewing were numbered, and delivering the same content online and on demand was the future.

With House of Cards and Arrested Development, Netflix has raised the stakes. As many insiders understand, on-demand services like Netflix, Hulu and others are really the future of many types of content delivery, and with this move, Netflix has essentially become the HBO of this new age.

Of course, HBO has its own version of OTA services called HBO Go, and more and more dedicated content providers such as ESPN and others are following suit with similar services. They all understand that delivering content on-demand to any device is the future. But Netflix's leadership position at this time in history cannot be underestimated. Hastings has emerged as the elder statesman of OTA services, and Netflix has to be perceived as a direct threat to cable companies' current position as the primary providers of TV and video content.

So with the Emmy nominations for House of Cards and Arrested Development, Netflix is now officially recognized by the TV industry. It confirming that Netflix is a legitimate medium, capable of delivering original content through a brand new delivery system. I also believe it signals that the folks behind the Emmys actually understand that with these nominations, they are giving their blessing to this new era where broadband delivery of Internet content and OTA services will be the norm. They expect services like Netflix to be a part of the TV and movie industry framework from now on.

Regardless of whether House of Cards or Arrested Development actually win any Emmys, Netflix has already become a winner at this year's show by nature of this giant endorsement of its labors and vindication that its bet on creating original programming panned out. This nod from Hollywood allows Netflix to play with the big guns in the cable world and, more importantly, cements its position as the industry leader in providing OTA services that will eventually change the way most of us receive our TV and video content in the future. - Time